The fact that Euroforest used the occasion of its 10th anniversary to announce a major new initiative speaks volumes for the company’s progressive attitude to the timber business.

At a celebratory luncheon held in early April at the Gleneagles Hotel near Perth, the emphasis could easily have been placed on the magnificent achievement of having built an annual turnover of more than £21m, or on the fact that the company now marketed in excess of 1 million m³ of timber annually for both private woodland owners and Forest Enterprise, linking more than 1,300 woodland owners with the forest products industry throughout the UK.

But rather than indulge in self-congratulation, managing director Tony Willis insisted: ‘We’re not standing still. We’re already exploring opportunities at home and abroad.’

The company’s aim is to double the amount of timber it markets to 2 million m³ by the year 2010, although Mr Willis acknowledged this would mean no more than ‘keeping pace’ with production growth.

As previously reported (TTJ April 7/14), the ‘wood-link’ initiative launched at the Gleneagles event is designed to woo increased volumes from private growers by offering them the opportunity to select their preferred approach to the marketing of their timber. As well as the traditional tender and auction route, options include index-linked sales with prices governed by market movements and also commitment of all production from a plantation ‘with an obvious price penalty’. Mr Willis added: ‘If the client wants to sell by other means than putting the timber on the market, he can also use the independent Beacon electronic auction.’

‘Wood-link’ allowed private grower members rather than the harvesting company to make the decision when to market the timber. Price index information would also enable those same clients to ‘to track market conditions and make an informed decision about when to harvest’, said Mr Willis.

The scheme, to which undisclosed quantities of timber have already been committed, would also be transparent – through an open book costing system – and would reduce transaction costs, he said.

Speaking to TTJ, Mr Willis said the aim of ‘wood-link’ was ‘to try to unlock some of the private sector potential’ in terms of timber supply. The scheme differed from others in being ‘demand driven’ in that it ‘matches the demands of the industry to the demand of the owner to sell timber’, he explained. Private grower members were asked simply to ‘bank’ information concerning their plantation marketing plans and price aspirations such that ‘when the demand comes, we can match the supply to it’.

&#8220We offered them long-term contracts because we had long-term access to long-term timber stocks. Forest Enterprise saw the benefits of such contracts because they helped people to make long-term investment plans”

Pan-European initiative

At Gleneagles, Mr Willis also alluded to a ‘pan-European’ initiative from Euroforest that had been given the working title of the ‘Baltic Project’ which would draw on the company’s existing close links with Scandinavia. He later explained to TTJ: ‘Over the last two years, we have been involved in a project to supply bioenergy materials to power stations in Sweden and Denmark – with a possible extension to Holland. The main driving force is the need to move from the burning of fossil fuels to renewable sources of energy – particularly biomass and other products from the wood chain. We are looking at a demand of up to 5 million tonnes per year for a cheap bulky product with a seasonal demand.’

The project partners are logistics experts who, according to Mr Willis, have devised a shipping system which would revolutionise the movement of this material. Conventional vessels are able to carry only around 2,000 tonnes per voyage whereas this new system would achieve 8,000-10,000 tonnes per voyage ‘and self-discharge with minimal shore assistance’.

Mr Willis said: ‘Cost calculations show a large potential saving and our role will be to secure the raw material in the Baltic states, Russia and Poland. The system is likely to be built in China, owned by Germans, managed by Swedes and filled by us – a pan-European venture if ever I saw one!’ Start-up is expected next winter in readiness for full operation by 2003, he added.

Euroforest believes that its willingness to innovate created a turning point in the company’s history four years ago when Forest Enterprise awarded it long-term contracts.

‘We offered them long-term contracts because we had long-term access to long-term timber stocks,’ explained Mr Willis. ‘Forest Enterprise saw the benefits of such contracts because they helped people to make long-term investment plans.’

&#8220There is a need for a more collaborative approach. ‘Wood-link’ is an excellent example of how that collaboration is starting to take place”

Positive growth

Mr Willis expected further growth in its business with Forest Enterprise as well as in its spot business. ‘Wood-link’, meanwhile, would satisfy Euroforest’s desire for new growth since ‘one of the major growth areas will be the private sector’. He was confident of the scheme’s success because of its independence from end users and because it had been researched thoroughly over several years with all key sectors of the timber chain, including private growers.

An immediate reaction to Euroforest’s ‘wood-link’ initiative came from Cedric Wilkins, Scottish Enterprise‘s team leader for the Forest Industries Cluster. Speaking at the Gleneagles launch, he hailed the scheme as a ‘good example’ of how to meet the need for flexible arrangements between growers and the timber processing chain. Close contacts between the two sectors were ‘key to a healthy forest industry’.

‘There is a need for a more collaborative approach. ‘Wood-link’ is an example of how that collaboration is starting to take place.’

Achieving synergies

Mr Wilkins also pointed to development of the Steven’s Croft site in south-west Scotland as an example of how mutually-beneficial synergies can be achieved (TTJ April 28). Three companies – James Jones & Sons Ltd, Forest Garden plc and AW Jenkinson Forest Products – have located at the site adjacent to the main west coast railway line near Lockerbie and two sawmills are already up and running.

Jenkinson expects to collect around 100,000 tonnes per year of wood by-products from the neighbouring Forest Garden sawmill and will also provide Forest Garden with a transport service for the former’s sawn timber output.